Tag Archives for bailout.
And the Allied Pilots Association, which represents pilots at American Airlines, has a creative suggestion. They want the federal government to buy up all the middle seats or more specifically “purchase enough seats on each flight to eliminate the need for any passenger to sit next to a stranger.”
The union says it “has begun discussing the SEATS concept with key lawmakers” to get it included in a CARES Act followup or passed as a standalone. Watch your wallets.
The Singapore government, Cathay Pacific’s engineering firm, and a wine distributor all got federal CARES Act subsidies. And there’s still $2 billion undistributed.
When the Treasury Department first reported on airline subsidy payouts under the CARES Act I was shocked to learn that 96 airlines were receiving payroll support grants. Who knew there were 96 airlines?
The Treasury Department wasn’t done yet, and there were still a couple of billion dollars to hand out. This week they updated their report, and they’ve committed $24,157,445,417 out of an appropriated $25 billion in payroll support grants, and funds are going to 287 airlines. Who knew there were 287 airlines?
Republic Airways flies for American Airlines, Delta, and United. The federal government agreed to provide Republic with $206 million in CARES Act payroll subsidies.
Airlines taking these funds can not furlough any employees through September 30. They’ve reportedly done it anyway.
Transportation Secretary Elaine Chao isn’t ruling out another bailout and says it’s something to discuss and consider in the fall, if airlines need one.
However there was absolutely no reason to bail out the airlines and for the overall economy – and for workers who will lose their jobs anyway – the bailouts were actually destructive. Still, the President doesn’t want mass layoffs one month before the election.
Airline CFO Derek Kerr offered that the appraised value of the program is between $18 and $30 billion. And he confirmed that the program is expected to be used as collateral for a federally subsidized CARES Act loan. The “deal is not done yet with the government, [but we] fully expect it to be [by the] end of the second quarter.”
Larry Summers was President Obama’s chief economic advisor, Bill Clinton’s treasury secretary, and President of Harvard University. He’s one of the smartest people on the planet his arguments, both when you agree or disagree, are force to be reckoned with.
Summers explains that by trying to keep all of the airlines alive, you assure that they all have excess capacity and that they’re all unprofitable. That has long-term consequences for the whole economy, “the failure to allow the appropriate economic adjustment is kind of the mistake that Japan made in the 1990s. We need as we realize how long this is going to play to be aware of those risks.”
Unsurprisingly with so little demand for air travel airlines are doing their best to get workers to take leaves and early retirements. United has a new offer that includes airline elite status and miles.
Some of the funds went to the cleverly-named Rite Bros Aviation, some to Eastern Airlines which chartered Mike Pence his campaign plane in 2016, Guardian Helicopters which doesn’t even seem like an airline and $27 million went to Clay Lacy Aviation which charters private planes.
Despite taking CARES Act payroll protection subsidies from the federal government, airlines including Delta, United, and JetBlue have cut worker hours. This means that employees receive less pay, and airlines spend less on payroll, despite requirements not to furlough workers or reduce rates of pay through September 30.
American Airlines CEO Doug Parker said “I was there when we were working on CARES and that wasn’t the intent or meaning of it.” Parker is right, that wasn’t how the CARES Act was supposed to work. The original language – that got changed – has now been leaked.
Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel -- a topic he has covered since 2002.
Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »
